A lockdown of Metro Manila to contain a coronavirus outbreak in the Philippines will cut national economic growth that depends largely on the flow of people through the 13 million-person capital and its suburbs, analysts say.
President Rodrigo Duterte ordered last week that the National Capital Region be sealed off from March 15 through April 14. The order came after officials discovered local transmission of the deadly virus that has infected people in 125 countries over the past two months.
Land, air and sea travel will stop during the lockdown month and anyone entering the metro area for work from its farther-flung suburbs must show proof of employment, according to official documents and people living in Manila.
The lockdown will set back GDP growth this year by 0.3% to 0.5%, said Jonathan Ravelas, chief market strategist with Banco de Oro UniBank.
The Southeast Asian country initially forecast by the Asian Development Bank to grow 6% this year depends heavily on consumer spending, which is growing because of job creation on the back of new investments in factories, infrastructure and call centers. Officials hope GDP growth will help ease poverty that afflicts one in five Filipinos.
Many inbound workers lack company ID cards, sources in Manila say. They say malls are supposed to shutter and erode the income of people who work there. Duterte himself encouraged younger people to stay home.
“If people can’t get to work, then they can’t get paid,” said Christian de Guzman, vice president and senior credit officer with Moody’s Sovereign Risk Group. “That has a feedback loop into the confidence effect and what it means for consumption.”
Countries such as China and Italy, which have many more coronavirus cases than the 140 reported by the Philippines as of March 15, also declared mass lockdowns. In most of the world, however, lockdowns apply to communities with sudden or uncontrolled outbreaks.
Nearly 170,000 cases of the virus have been recorded worldwide since it was discovered in China three months ago.
The “unprecedented” move in Manila will hurt tourism and business meetings by suspending flights over the coming month, de Guzman said. If overseas workers can’t leave the country for jobs abroad, the Philippine economy would miss their remittances from abroad, he added. Those remittances make up 9% of the $356.8 billion economy.
It’s unclear, he said, whether equipment for Philippine infrastructure projects can get in through Manila over the coming month.
Officials haven’t made it clear either how the government might compensate people who can't work or stores that must close, said Maria Ela Atienza, political science professor at the University of the Philippines Diliman. Normally the capital’s giant Robinsons Malls and SM Supermalls do steady business after work and on weekends.
The degree of damage to economic growth in the Philippines will depend on how well lockdown measures control disease spread, market strategist Ravelas said.
“I think the government just took a drastic measure because we don’t want to be like South Korea or maybe Iran or Italy,” said Aaron Rabena, research fellow at Asia-Pacific Pathways to Progress Foundation. He plans to work from home. “We can’t be just a country who will just act when the problem is already there, it’s already worse.”
Socioeconomic Planning Secretary Ernesto Pernia said the lockdown’s economic impact will be “minimal and ephemeral,” as quoted Friday by domestic media outlet GMA News Online.
The lockdown is raising questions about effectiveness, especially if workers are still allowed to come and go and health workers can't keep up with new virus cases, Atienza said. National police will find it a challenge to check all roads leading into the capital region, she added.
“People are scared, because in a way it shows lack of trust in government because our public health system for the past few years has suffered from lack of funding,” Atienza said. “We really are unprepared for pandemics.”
Over the weekend, people packed bus stations and the airport to get out of Manila before the lockdown started at 12:00 a.m. Sunday, she said.